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Monash IVF (ASX:MVF) share price jumps on profit growth and dividend restart

Monash IVF share price profit result

The Monash IVF Group Ltd (ASX: MVF) share price is bucking the market downtrend after it posted its profit results and restarted its dividend payouts.

The Monash IVF share price jumped 2% to 79 cents when the S&P/ASX 200 Index (Index:^AXJO) fell 0.3%.

The pleasing profit result may also be lifting sentiment towards its rival. The Virtus Health Ltd (ASX: VRT) share price increased by a similar amount to $6.25 at the time of writing.

The Healius Ltd (ASX: HLS) share price gained 0.9% to $3.94 too. Healius offers In vitro fertilisation (IVF) treatments, although its results announcement this morning may be driving the gains.

Monash IVF share price profit growth injection

Coming back to Monash IVF, the group posted a first half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 24.4% to $24.7 million. It’s adjusted interim net profit jumped by 32% to $12 million while revenue advanced 17.8% to $90.8 million.

The strong recovery from the COVID-19 impact prompted management to declare a 2.1 cents a share interim dividend. The group did not pay a final dividend in 2020 as the disruption from the pandemic forced clinics to shut.

That created pent-up demand for IVF services. The group reporting stimulated cycle growth of 27.4% in the six months to end December 2020.

Winning market share

The bounce in cycles (treatments) accelerated in the second quarter of FY21 for Monash IVF. Cycle growth in the December quarter came in at 33.1% compared with the national average of 20.6%.

Management said it won market share in Victoria, New South Wales, Queensland and the Northern Territory in that quarter.

Monash IVF share price on the right cycle

Further, Monash IVF’s ultrasound business, which remained opened during the pandemic, recorded growth of 11.7%.

Given its operating leverage, the group’s bottom line should continue to expand more quickly than its top-line as the recovery unfolds.

Management’s upbeat outlook gives investors a reason to think the good times will continue.

Feelin’ clucky about 2021

“The desire for patients to seek assistance when trying to conceive has increased despite the ongoing pandemic,” said the group.

“The Company’s reported NPAT for the year ending 30 June 2021 is expected to be approximately $23.7m to $25.7m, as compared to $11.8m in the prior comparative period.

“The Company’s NPAT before certain non-regular items for the year ending 30 June 2021 is expected to be approximately $21m to $23m, as compared to $14.4m in the prior comparative period.”

But it isn’t all good news. Its Malaysian operations are recovering more slowly due to ongoing COVID social restrictions. The group’s Tasmanian business is also slipping backwards.

However, the negatives won’t take the glow off the Monash IVF share price. If the interim dividend is replicated in August, the stock is sitting on a yield of over 7% if franking is included.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Virtus Health Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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